Minority in Parliament raises red flag over attempts to sell NIB to the ADB

The Minority group in Parliament has raised a red flag over an attempt by the government to sell the National Investment Bank (NIB) to the Agricultural Development Bank (ADB) over lack of liquidity to recapitalize.

Explaining the complexity of the matter as it unfolds, Ranking Member of the Finance Committee of Parliament and the Minority Spokesperson on Finance, Isaac Adongo said the Bank of Ghana (BoG) has been extremely complicit in providing its regulatory forbearance to bring the NIB to its knees and now in an unethical and opportunistic position to acquire its own regulated entity.

“So, who watches the watchman or protects the interest of NIB? he asked.

In his view “any action relating to NIB that has the potential to benefit BoG is illegal, unethical, and smack of deliberate opportunistic regulatory conduct.

As if the conflict of interest issues are not enough, their methods also have technical and work flaws”

According to Mr Adongo, actions of the BoG and the government in respect of NIB only add one more puzzle to “their technical ineptitude. Unless there is an ulterior motive that I may not be aware of or perhaps something taught to only a group of people in Yale and Harvard Business Schools”.

He said, the complexities often introduced into these simple and obviously common sense finance decisions are mind-boggling and “it looks to many that the government and BoG are deliberately making things look more complex than they actually are so they can confuse the average Ghanaian and then loot in the process”.

“Let’s take a look at these scenarios…ADB is owned by the state through BoG (64%), GoG (21%), and GAT (11%) making it a total of96% ADB with the remaining 4% owned by residual retail investors.

The same state owns NIB. As shareholders of NIB you are being asked to bring more money to recapitalize your bank (NIB) but you say you don’t have money to recapitalise it, but you turn around to tell one of your banks, ADB, to come and buy your other Bank NIB”.

With above scenario, the Minority has concluded that, “effectively, you are the one using your own money to buy a bank that you already own anyway.

“So, you collect your own money as consideration for sale of your own bank to yourself and wake up the next morning pretending you no longer own the bank”.

Isaac Adongo described the issues as “needless complexity, senseless smokescreen for thievery by Government and BoG acting together”.

“Will ADB operate both ADB and NIB on one street competing against itself as going concerns?

He added that, collapsing NIB despite its large size, national status and systemic effect it could have, possibly leading to the wiping off of several viable jobs in a country that is struggling to create jobs for its teaming unemployed youths.

He drew Ken Ofori-Atta’s attention to what he called “legal, technical and regulatory flaws” in his intended actions in relation to NIB and to offer some proposals for him to consider in resolving the issues to produce a strong and vibrant NIB, insulate the sector form further systemic hemorrhage and restore confidence in the financial sector, retain jobs and stay compliant with performance obligations to the IMF under the ECF Program.

He noticed that, the Bank was established by an Act of Parliament called the NATIONAL INVESTMENTBANK Act, 1963 (Act 612) with a clear mandate to help scale up investments and contribute to economic development.

As a result, the bank does not operate under the companies code or the new companie’s Act.

“Let this be clear to him first but as a company whose activities are regulated by the BOG under Act 930, legimate regulatory actions can be taken against NIB under the Act to place it under Administration (section), revocation of licence (Section) and consequentially place it under receivership (section) to resolve it without regard to the Act establishing it.

It is getting clear that the government, acting through the BOG, does not intend to pursue this path.

This leaves Act 612 as the only appropriate legal option for the government’s intended action with regards to NIB.

Section 22 of the NIB Act, Act 612 provides guidance on any conduct regarding NIB that has the ultimate effect of liquidation or resolution of NIB, such as acquisition or merger.

The liquidation provisions make it clear that any action or actions contemplated with the consequential effect of liquidation of NIB, which action is not in compliance with section 22 of Act 612, is illegal if recourse is not taken to Parliament, and an Act passed by Parliament to that effect and in accordance with directives contained in that Act so passed”.

By Edzzorna Mensah